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Deepwater oil drilling is the secular growth story everyone loves to hate. Becoming well-known in the early parts of last decade as a result of the supply-constrained environment of that time, deepwater drilling is a capital intensive industry, and often requires high oil prices in order to be profitable. It is for exactly this reason that many deepwater drillers have come down in recent months from what were already reasonable valuations. The market believes that increasing production from the shale, coupled with stagnant demand from OECD countries and slowing demand growth in the developing world will continue to be a drag on oil prices, and hence will make deepwater drilling into an unprofitable business.

I believe that is a misplaced...

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